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May 21, 2014

The Social Progress Index

GDP per capita is the most widely used indicator of a country’s economic performance and standard of living. But, over the years, increasing concerns have been raised by leaders around the world about the adequacy of GDP-based measures of economic well being which pay little attention to other important societal factors. A few years ago, the Commission on the Measurement of Economic Performance and Social Progress was created to address these concerns. In its final report, the Commission recommended complementing measures of GDP and economic production with additional social and environmental measurements that better capture people’s overall standard of living and quality of life.

The SPI report defines social progress as “the capacity of a society to meet the basic human needs of its citizens, establish the building blocks that allow citizens and communities to enhance and sustain the quality of their lives, and create the conditions for all individuals to reach their full potential.” The comprehensive Index uses 54 indicators of social and environmental outcomes as its measure of social progress. These are organized along 3 fundamental dimensions: Basic Human Needs, Foundations of Wellbeing, and Opportunity. Each dimension further encompasses 4 major categories:

The overall analysis found a broad positive correlation between economic performance, as measured by GDP per capita, and social progress. Wealthier countries enjoy greater social progress while poorer countries lag behind. The study also uncovered major differences across the social performance of the 132 countries, with each country having its unique strengths and weaknesses. Economic growth does not necessarily result in social advancement.

Basic Human Needs improve rapidly with rising incomes. At low income levels, small increases lead to large improvements in social progress. But, the improvements flatten out as incomes continue to rise. Foundations of Wellbeing and Opportunity show a similar flattening with rising incomes, but there is considerably more variability between countries at all levels of income depending on their distinct policy agendas.

The study calculated an overall social progress index for each of the 132 countries, and grouped them into 6 major tiers. The top tier includes 10 countries with strong scores across all social progress dimensions. These are fairly well-to-do countries with relatively small populations. New Zealand, Switzerland and Iceland are the top 3, with populations of 4.2, 7.6 and .3 million respectively. Only 3 out of the top-tier countries have populations over 10 million: Canada (34.0), Australia (21.5) and the Netherlands (16.6).

The second tier includes 13 countries with somewhat lower social progress scores, but still quite well-off. This group includes 5 of the world’s leading economies in terms of GDP and populations: Germany, the UK, Japan, the US and France.

The 16 countries in the third tier have significantly different levels of economic development and social progress. Costa Rica, for example, has a relatively high SPI and low GDP per capita, while the United Arab Emirates has one of the world’s highest GDP per capita but significantly lower SPI.

Next is a highly diverse group of 52 countries, with widely differing strengths and weaknesses. A few are quite well-off, - Kuwait, Saudi Arabia and Trinidad and Tobago; most others much less so, - e.g., Honduras, Mongolia and Morocco. This groups includes emerging economies with large populations including Brazil, Mexico, South Africa, Russia and China, as well as countries like Guyana and Montenegro which have less than one million inhabitants.

The 5th and 6th tiers of countries are mostly quite poor with fairly low SPIs, further evidence that poverty and poor social performance almost always go hand-in-hand.

As with any good data science study, the Social Progress Index is less about the numbers than about the story behind the numbers. We can learn a lot about each of the 132 countries by looking at the picture that emerges from its 54 indicators, 12 components and 3 dimension. Let’s take a brief look at the US.

The US has the second highest GDP per capita, behind only Norway with a population of 4.2 million. But the US has an SPI of 16, while Norway’s is 5. It’s not so easy to compare the highly complex USA, - which has a multicultural population of over 300 million, - with countries with much smaller and more homogeneous populations like Norway or the top ranked New Zealand, Switzerland and Iceland. When interpreting indices, we have to make sure that we’re not comparing apples and oranges.

But, with its SPI of 16, the US is not only behind Norway and tiny Iceland, but also behind the more comparable Canada, Germany, the UK and Japan, with SPIs of 7, 12, 13 and 14 respectively. A number of articles have rightfully questioned why the wealthy and powerful USA did not do better.

According to its SPI scorecard, the US ranks 23rd in Basic Human Needs, 36th in Foundations of Wellbeing, and 5th in Opportunity. Compared to the 15 countries with most similar GDP per capita, the US was below average in Basic Human Needs, being particularly weak in the Water and Sanitation and in the Personal Safety components, this last one due to the relatively high rate of homicides, traffic deaths and political terror.

The US was also below average compared to its economic peers in Foundations of Wellbeing. It ranked 70th in the Health and Wellness component, - including a particularly high 125th rank in obesity rate; 39th in Access to Basic Knowledge; and 23rd in Access to Information and Communications. But the US did significantly better in the Opportunity dimension, ranking 1st overall in Access to Advanced Education.

“I think this wasn’t the picture of America that I think many of us Americans have - that we are a leader, a social leader, that we’ve advanced the ball in terms of opportunity and the needs of our citizens. And it shows anything but that,” said professor Porter in a recent CNN interview.

In the end, what we measure guides the choices we make. The Social Progress Index is a tool to help position social progress alongside GDP per capita as key measures of a country’s success. And hopefully, “By reframing how the world measures success, putting the real things that matter to people’s lives at the top of the agenda, we believe that governments, businesses and civil society organizations can make better choices.”